You work as a project manager for BlueWell Inc. You are calculating the performance indexes of
your project. The cost variance (CV) of your project is 30. What does this figure depict?
A.
Project is behind the schedule.
B.
Costs are higher than planned.
C.
Costs are right on target.
D.
Costs are lower than planned.
Explanation:
According to the question, the cost variance of the project is 30, which is a positive figure. A
positive value means that cost is less than planned. What is CV? Cost variance (CV) is a measure
of cost performance on a project. The variance notifies if costs are higher than budgeted or lower
than budgeted. The cost variance is calculated based on the following formula: CV = Earned
Value (EV) – Actual Cost (AC) A positive value means that spending is less than budgeted,
whereas a negative value indicates that costs are higher than originally planned for the project.
Answer option C is incorrect. If the CV is zero, it shows that cost is right on target.
Answer option A is incorrect. This result is depicted by viewing the schedule variance (SV), not the
CV.
Answer option B is incorrect. If the CV is a negative value, it depicts that the costs are higher than
planned.